Blog - 25/11/2013
Inheritance Tax is creeping up on you
Edwin Coe comment on the prediction that in two years time the number of estates that will suffer Inheritance Tax will reach an all time high.
Why are so many people who die leaving estates which are taxable?
It is a combination of rising house prices and the failure to index the tax free allowance, known as the Nil Rate Band. It has been frozen at £325,000 for 5 years. Although the freeze was imposed by Labour, it has been continued by the Coalition who have said it will continue until at least April 2018. In effect the Nil Rate Band will be frozen for 10 years.
In 2009 property prices were static or falling but the recent resurgence in the property market means that there will be a two way pull. Property prices are rising at the fastest rate since the freeze began meaning that many estates are now being put in a tax paying position. That would not have been the case only a few years ago. The situation can only get worse as property prices rise.
The introduction of the Transferable Nil Rate Band, which means that a married couple or civil partners get an allowance of £650,000 between them, has helped to keep the figures down in recent years but the rising property market in London means that the vast majority of clients will now face an Inheritance Tax problem. We will be happy to discuss the way in which you can resolve the problem and, potentially, take your estate or the estates of you and your spouse out of the Inheritance Tax net.
Having left Inheritance Tax on the “back burner” since being elected, it is rumoured that the Autumn Statement next month is going to tinker with Inheritance Tax again, particularly in relation to trusts. Watch this space.
Contact: Nick Giles, Partner, Edwin Coe LLP
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